Residents Against Improper Development Incorporated v Chase Property Investments Pty Ltd (No 2)

[2006] NSWCA 375

NEW SOUTH WALES COURT OF APPEAL

CITATION:      Residents Against Improper Development Incorporated v Chase Property Investments Pty Ltd (No 2) [2006]  NSWCA 375

FILE NUMBER(S):
CA 40090/06; 40714/06

HEARING DATE(S):               

DECISION DATE:     20/12/2006

PARTIES:
Residents Against Improper Development Incorporated
Blue Mountains City Council
Chase Property Investments Pty Limited

JUDGMENT OF:       Giles JA Tobias JA McClellan CJ at CL   

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S):         Not Applicable

LOWER COURT JUDICIAL OFFICER:     Not Applicable

COUNSEL:
A1: T Robertson SC / L Byrne
A2: I Hemmings
R: C W McEwen SC / S A Duggan

SOLICITORS:
A1: Woolf Associates, Sydney
A2: McPhee kelshaw, Springwood
R: Pike Pike & Fenwick

CATCHWORDS:
COSTS – appeal successful in part – primary hearing in Land and Environment Court – Class 1 appeal – where preliminary issues of law determined prior to merits hearing – appropriate orders – principles

LEGISLATION CITED:
Environmental Planning and Assessment Act 1979
Environmental Planning and Assessment Regulation 2000
Uniform Civil Procedures Rules 2005, Part 36 Rule 16

DECISION:
1. The Court rejects the Council’s application to set aside or vary Orders (ii) and (iii) insofar as they relate to orders that the Council is to pay the respondent’s costs with respect to that application
2. No order as to the costs of the first appellant with respect to the application

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40090/06
CA 40714/06
L&E 10720/05

GILES JA
TOBIAS JA
McCLELLAN CJ at CL

Wednesday 20 December 2006

RESIDENTS AGAINST IMPROPER DEVELOPMENT INCORPORATED & Anor v CHASE PROPERTY INVESTMENTS PTY LTD (No 2)

Judgment on the papers

1. THE COURT:  The appeal in this matter which was determined by the Court in a judgment delivered on 23 November 2006 (the substantive judgment) concerned two questions.  Broadly speaking the first was whether cl.10.8(e) of Blue Mountains City Council Local Environmental Plan 1991 (the LEP) was a “development standard” within the meaning of the definition of that expression in s.4(1) of the Environmental Planning and Assessment Act 1979 (the EPA Act) (the development standard issue). The second was whether the development proposed by the respondent was “designated development” within the meaning of s.77A of the EPA Act and cl.4(1) of the Environmental Planning and Assessment Regulation 2000 including Pt 1 of Schedule 3 thereof (the designated development issue).

2. The primary judge answered both questions in favour of the respondent.  On appeal this Court answered the first question in favour of the respondent and the second question in favour of the first appellant.  In this respect, the second appellant (the Council) actively supported the first appellant’s submissions that the relevant provision in the LEP was a development standard but did not take part, either before the primary judge or this Court, in the argument with respect to the second question.

3. As a consequence of this Court’s findings on the two questions before it, an issue arose as to what, if any, orders for costs should be made by the Court with respect to the proceedings before the primary judge and/or the appeal.  Certainly, so far as the costs of the appeal were concerned, both appellants were aware at the conclusion of their argument on the development standard issue, that the appeal against the primary judge’s determination of that issue would be dismissed as the respondent was not called upon to make submissions with respect thereto.   

4. Towards the end of the hearing of the appeal, all counsel made submissions with respect to the question of costs of the proceedings before the primary judge as well as on the appeal.  In particular, there was some debate as to the circumstances under which it was appropriate for costs to be awarded in the Land and Environment Court where, in a Class 1 appeal, preliminary issues of law had been determined prior to any merits hearing. 

5. In particular, it was noted that the question of the existing practice of the Land and Environment Court with respect to the making of orders for costs in the circumstances referred was then the subject of a reserved judgment in this Court in Hunter Development Brokerage Pty Ltd v Cessnock City Council [No 2] [2006] NSWCA 292. That judgment was delivered shortly after the decision in the present matter had been reserved.

6. As a consequence of the delivery of judgment in Hunter Development, the question arose as to what, if any, order for costs should be made with respect to the proceedings before the primary judge concerning the two preliminary questions of law which she had determined. In the substantive judgment, this matter was addressed by Tobias JA at [197]-[208] and McClellan CJ at CL at [218]-[252]. The result of that discussion was that this Court made the following orders with respect to the costs of the proceedings before the primary judge and on the appeal:

   “(i)The first appellant to pay the respondent’s costs of the proceedings before Pain J with respect to Question 1 and the respondent to pay the first appellant’s costs of those proceedings with respect to Question 2, the costs in each case to be set off against each other;

   (ii)The second appellant to pay the respondent’s costs in the proceedings before Pain J with respect to Question 1;

   (iii)The appellants to pay the respondent’s costs in this Court with respect to Question 1 determined by Pain J and the respondent to pay the first appellant’s costs in this Court with respect to Question 2, the costs in each case as between the first appellant and the respondent to be set off against each other.”

7. The foregoing orders were made taking into consideration the oral submissions of the parties at the hearing of the appeal with respect to costs and which included the following submissions of Mr Hemmings on behalf of the Council:

   “GILES JA:           Is there anything you want to say about costs?

   HEMMINGS:       In terms of costs it’s complex, is probably the starting point, to say anything on costs your Honour because we now have the – potentially as I understand it three different locations that a cost order might be sought.  First, it’s here and costs would effect certainly follow the event of the issue.  I have to accept that and there is the question of whether the Court would then divide it between issues.  The costs before Pain J, would follow the same course, so I just leave that to your Honours, frankly.”

8. At the conclusion of the hearing of the appeal the parties requested and were granted leave to provide further written submissions with respect to the question of costs.  Those submissions were duly filed but do not touch or concern the matters now raised by the Council.  They related only to the relevant law and practice of the Land and Environment Court with respect to the awarding of costs in Class 1 appeals. 

9. At the time the substantive judgment was delivered, the legal representative of the Council requested that it be granted leave to provide further written submissions with respect to the costs orders which had already been made.  Tobias JA granted that leave upon the basis that it was open to the Court pursuant to Pt 36 r.36.16(1) of the Uniform Civil Procedures Rules 2005 (UCPR) to set aside or vary the costs orders which had been made if a notice of motion for the setting aside or variation of those orders was filed before entry of the judgment or order in question.  Although no formal notice of motion has been filed, entry of the orders has not yet occurred and the Court is prepared to accept the Council’s application for leave to make further submissions on the question of costs as constituting a notice of motion to set aside or vary the orders referred to in [6] above so far as they impose costs obligations upon the Council. 

10. On further consideration the Council’s application to Tobias JA on 23 November 2006 for leave to make further submissions with respect to the costs orders should not have been granted.  What his Honour overlooked was that the parties had had the opportunity of making submissions with respect to the question of costs of which they had taken advantage during the hearing of the appeal.  In this respect the Council in oral argument in the passage from the appeal transcript set out in [7] above expressly left it to the Court to make appropriate orders.  The Council put nothing to the Court either orally or in writing along the lines of what it now seeks to submit.

11. Nevertheless, as all parties have now lodged written submissions with respect to the matter and have agreed that the Court should determine the question on the papers, we shall, reluctantly, deal with them.

12. In its written submissions the Council sets out the history of the proceedings before the primary judge which differs little from that written in [7]-[9] of the substantive judgment.  When the first appellant was joined in the proceedings it raised four questions of law of which three “overlapped” with the Council’s Statement of Issues filed in the Class 1 proceedings in the Land and Environment Court.  Two of those four questions related to the development standard issue, the third to the designated development issue and the fourth to the proper construction of clause 30 of the LEP, an issue which was conceded by the respondent on the first day of the hearing before the primary judge.  The Council therefore submits that for the purpose of any order for costs of the proceedings before the primary judge, it was successful on the clause 30 issue. 

13. As to the development standard issue, the Council submits that the debate before the primary judge had two parts.  The first involved the construction of the words “reticulated sewerage system” as used in clause 10.8(e) of the LEP.  The second was the development standard issue determined by the primary judge in favour of the respondent and confirmed by this Court on appeal.  However, the Council was successful on the construction issue (which was not challenged on appeal), a factor which it also submits is relevant to the making by this Court of any orders for costs with respect to the proceedings before the primary judge.

14. The Council therefore submits that it is appropriate in the circumstances that the question of costs before the primary judge should be dealt with on an “issue” basis.  Although the Council was unsuccessful both before the primary judge and on appeal with respect to the development standard issue as argued in this Court, it was nevertheless successful before the primary judge on the construction issue and on the clause 30 issue.  Accordingly, it submits that there should be no order as to the costs between the Council and the respondent with respect to the proceedings before the primary judge with the result that Order (ii) should be set aside. 

15. As to the costs of the appeal, the Council accepts that it has been unsuccessful on the only issue that it argued at the hearing of the appeal.  However, it submits that the effect of Orders (i) and (iii), which we have set out in [6] above, will mean that there will be a set off as between the first appellant and the respondent in respect of the first and second questions and that pursuant to Order (iii) it will not be practically possible to separately assess the costs that have been incurred by the respondent in relation to the Council’s argument on the first question that would not otherwise have been incurred in dealing with the first appellant’s argument with respect to the same question.  Accordingly, there should be no order with respect to that question as between the Council and the respondent with the result that Order (iii) should be set aside insofar as it relates to the council.

16. The first appellant shortly responded to the Council’s submissions opposing any variation or setting aside of Orders (ii) and (iii) insofar as they impose costs obligations on the Council.  It submits that if no order for costs is made against the Council that would leave the first appellant to bear the full incidence of the respondent’s costs in respect of the first question both before the primary judge and on the appeal, notwithstanding the fact that the Council was wholly unsuccessful in both forums.

17. Written submissions were also filed by the respondent in which it submits that the effect of the set-off in Orders (i) and (iii) as between the first appellant and the respondent will in all probability result in the respondent not being fully compensated for its costs with respect to the development standard issue upon which it was successful both before the primary judge and on the appeal.  It submits that the Council should not be entitled to avoid liability to pay the respondent’s costs of that issue merely because there will be a set-off as between the first appellant and the respondent with respect to the costs incurred in determining the first and second questions.  If that set-off results in a line ball or something close to it, the respondent will be left in the position of, in effect, bearing its own costs of the first question notwithstanding that it was successful with respect to that issue as against the Council. 

18. So far as Order (iii) relating to the costs of the appeal is concerned, the respondent further submits that the assessment and calculation of those costs is a matter to be determined by a costs assessor should the need arise and that the difficulty in assessment is not a proper basis for the Council to avoid its costs obligations both on the appeal and before the primary judge.  In this respect it is to be noted that Order (ii) stands independently of Order (i) so that if the set-off referred to in Order (i) results in a line ball, then under Order (ii) the Council will be required to pay the whole of the respondent’s costs in the proceedings before the primary judge with respect to the development standard issue.

19. On the other hand, if as a result of the set-off referred to in Order (i) the first appellant is still required to pay some of the respondent’s costs with respect to the first question, then the respondent will only be entitled under Order (ii) to recover the balance of its costs before the primary judge with respect to that question.  In other words, double dipping will need to be avoided. 

20. Although it may be true that in respect of the proceedings before the primary judge the Council had some success on some issues which were not the subject of the appeal, it will be a matter for it whether it wishes to seek from the primary judge an order for costs with respect to those issues upon which it was successful before her.  In our opinion, therefore, the success of the Council on those issues is irrelevant to any orders for costs made by this Court. 

21. In any event Order (ii) is confined to the respondent’s costs in the proceedings before the primary judge with respect to the first question.  It does not relate to the clause 30 issue which was not agitated before this Court.  Whether or not any further costs were incurred on that part of the development standard issue referred to by the Council as the construction issue, will be a matter for determination by a costs assessor if that becomes necessary. 

22. In the Court’s opinion, the Council’s submissions that it should be relieved of the existing orders that it pay the respondent’s costs both before the primary judge and on the appeal with respect to the first question should be rejected.  The Council actively participated in both forums with respect to that issue and was unsuccessful in both.  The fact that there will be a set-off of costs as between the first appellant and the respondent in respect of the same question is, in our view, irrelevant to the Council’s obligation to pay the respondent’s costs in respect of an issue in which it actively but unsuccessfully participated.

23. So far as Order (iii) is concerned, it may well be that any set-off between the first appellant and the respondent will leave the Council bearing the whole or a significant proportion of the respondent’s costs in this Court with respect to the first question.  However, that is the price the Council must pay in having actively pursued its own independent arguments on the appeal with respect to the development standard issue.  Either before the primary judge or this Court the Council could have filed a submitting appearance and left it to the first appellant to carry the burden of seeking to have the development standard issue determined in its and the Council’s favour.  It did not take that course.  Accordingly, it must bear the consequences of the usual order that costs should follow the event in respect of an issue such as that encapsulated in the first question.

24. For the foregoing reasons the Court rejects the Council’s application to set aside or vary Orders (ii) and (iii) insofar as they relate to the Council and orders that the Council pay the respondent’s costs with respect to that application.  There should be no order as to the costs of the first appellant with respect to the application.

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LAST UPDATED:               02/02/2007